Running Head: Assignment 1: What Business Entity Works Best? 1
Assignment 1: What Business Entity Works Best?
Strayer University
ACC 317: Advanced Federal Taxation
, Assignment 1:What Business Entity Works Best 2
Introduction
In this paper I will Compare and contrast the tax rules and treatment applicable to those
three forms of organization and the major way in which the tax treatment affects the shareholders
or partners. Explain at least two reasons why a business owner might opt for one form of
organization over another. Provide support for your rationale. Identify two sources of tax
guidance (e.g. IRS code, Revenue Procedure) for each form of organization and how it defines a
component of the tax policy for that form of organization. Research an organization by
identifying its entity type (corporation, s-corporation, or partnership) and describe how that
organization’s tax methods are detailed in their financial reports.
Compare and contrast the tax rules and treatment applicable to those three forms of
organization and the major way in which the tax treatment affects the shareholders or
partners
There are three basic legal forms for organizing a business, the first structure is a
Partnership. According the IRS.org website a “Partnership is the relationship existing between
two or more persons who join to carry on a trade or business. Each person contributes money,
property, labor or skill, and expects to share in the profits and losses of the business. For tax
purposes partnership must file an annual information return to report the income, deductions,
gains and losses from its operations, but it does not pay income tax. Instead, it "passes through"
any profits or losses to its partners. Each partner includes his or her share of the partnership's
income or loss on his or her tax return” (IRS.org, 2018).
The second structure is a S corporation. An According the IRS.org website “S
corporation is a corporation that elect to pass corporate income, losses, deductions, and credits
through to their shareholders for federal tax purposes. Shareholders of S corporations report the
Assignment 1: What Business Entity Works Best?
Strayer University
ACC 317: Advanced Federal Taxation
, Assignment 1:What Business Entity Works Best 2
Introduction
In this paper I will Compare and contrast the tax rules and treatment applicable to those
three forms of organization and the major way in which the tax treatment affects the shareholders
or partners. Explain at least two reasons why a business owner might opt for one form of
organization over another. Provide support for your rationale. Identify two sources of tax
guidance (e.g. IRS code, Revenue Procedure) for each form of organization and how it defines a
component of the tax policy for that form of organization. Research an organization by
identifying its entity type (corporation, s-corporation, or partnership) and describe how that
organization’s tax methods are detailed in their financial reports.
Compare and contrast the tax rules and treatment applicable to those three forms of
organization and the major way in which the tax treatment affects the shareholders or
partners
There are three basic legal forms for organizing a business, the first structure is a
Partnership. According the IRS.org website a “Partnership is the relationship existing between
two or more persons who join to carry on a trade or business. Each person contributes money,
property, labor or skill, and expects to share in the profits and losses of the business. For tax
purposes partnership must file an annual information return to report the income, deductions,
gains and losses from its operations, but it does not pay income tax. Instead, it "passes through"
any profits or losses to its partners. Each partner includes his or her share of the partnership's
income or loss on his or her tax return” (IRS.org, 2018).
The second structure is a S corporation. An According the IRS.org website “S
corporation is a corporation that elect to pass corporate income, losses, deductions, and credits
through to their shareholders for federal tax purposes. Shareholders of S corporations report the
